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Brexit: 'I don't want to struggle with the mortgage' Has Brexit stopped us spending?
(6 months later)
"We are heading for instability." As the uncertainty around Brexit continues, some people are putting spending plans on hold, or at least that's what a KPMG survey suggests.
Ian Rutter is a healthcare worker at a hospital in Harrogate, and he is very worried about the economic effects of Brexit. Almost a third have changed their spending habits due to Brexit uncertainty, and almost a quarter have put off major purchases, KPMG found.
So much so, he has taken on more weekend agency work to set money aside, and has cut his spending. But Office for National Statistics figures shows the situation may be rosier than some consumers think.
With the prospect of a no-deal Brexit and increased trade tensions with the US, along with recession warning signs in other economies, he believes the UK economy is "almost heading for the perfect storm". Monthly retail sales rose 0.2% in August, defying forecasts for a fall.
"Jacob Rees-Mogg [the Brexit-supporting leader of the House of Commons] has said we will be better off in 50 years time. I'll be dead in 50 years time, I'd rather be better off tomorrow," Mr Rutter says. The performance was boosted by online sales.
The 54-year-old lives in Huddersfield, and commutes to work in Harrogate by car, an 80 mile round trip. And department store sales rose 1.6%, reversing their decline through sales of clothes.
'Doomed' Nevertheless, some people say they are putting spending on hold.
He normally gets a new car, via financing, every two years, but has held off due to concerns about repayments. Richard Ward, a 29-year-old project manager from Leicester and his wife Emma, a children's nurse, put off booking a short holiday to Poland or Hungary due to Brexit being postponed.
"I sound like Frazer from Dad's Army - 'We're doomed!' - but I really am genuinely worried about the future," he says. They were concerned about the pound dropping while they are away, and the holiday becoming more expensive.
He is not going on holiday this year, has not upgraded his phone, and has put buying a new television on hold. The one luxury he still grants himself is a season ticket for Leeds Rhinos rugby league club.
Mr Rutter is also concerned about the effects of Brexit on his work in terms of finding staff.
"My support workers are Polish, Italian, Lithuanian. The house-keeping staff are from Spain and Portugal," he says. "I work in Harrogate, which is an affluent area, and we struggle to recruit people for low-income posts."
Richard Ward, a 29-year-old project manager from Leicester, has also put some of his spending on hold.
He and his wife Emma, a children's nurse, put off booking a short holiday to Poland or Hungary due to Brexit being postponed.
They are concerned about the pound dropping while they are away, and the holiday becoming more expensive.
'No-one knows''No-one knows'
"We were thinking about going within the next month. We've put it off," he said. "When the referendum result came in, the pound crashed against the euro. We worried that would happen again.""We were thinking about going within the next month. We've put it off," he said. "When the referendum result came in, the pound crashed against the euro. We worried that would happen again."
Mr Ward works in the construction industry. The company he works for, which imports goods from Europe, has already raised prices due to the drop in the pound.Mr Ward works in the construction industry. The company he works for, which imports goods from Europe, has already raised prices due to the drop in the pound.
He is concerned a no-deal Brexit will lead to queues of lorries at Dover, disrupting his firm's work.He is concerned a no-deal Brexit will lead to queues of lorries at Dover, disrupting his firm's work.
"If we get a deal, I don't think too much will change. I don't see that happening," he said."If we get a deal, I don't think too much will change. I don't see that happening," he said.
"The reality of the situation is no-one knows what will happen if we leave [the EU] without a deal.""The reality of the situation is no-one knows what will happen if we leave [the EU] without a deal."
Saving more 'Cautious'
Some argue that the economic risks of a potential no-deal Brexit have been exaggerated by those who do not want to leave the EU.
But just under a third of UK consumers have changed their spending habits due to Brexit uncertainty, and just under a quarter have put off making major purchases, a survey by KPMG suggested.
People are also delaying booking holidays and making stock market investments, the accountancy firm said.
Paula Smith, head of banking at KPMG UK, said: "It is clear people are uncertain about the future, spending and investing less while saving more.Paula Smith, head of banking at KPMG UK, said: "It is clear people are uncertain about the future, spending and investing less while saving more.
"However, while people work to protect their finances from Brexit uncertainties, interest rates remain stubbornly low, so savings aren't really working for people."However, while people work to protect their finances from Brexit uncertainties, interest rates remain stubbornly low, so savings aren't really working for people.
"The business world has been cautious about investing for growth since the referendum and that's clearly playing through into the real economy and people's financial confidence.""The business world has been cautious about investing for growth since the referendum and that's clearly playing through into the real economy and people's financial confidence."
Younger people tend to be more concerned about the economic effects of Brexit, with 46% of 18 to 34-year-olds delaying big purchases or putting more money into savings, said KPMG. But according to the ONS, there is some buoyancy in consumer spending.
People aged 35 and over have put more money into savings, while the over-55's tend to be least worried, with only one in five changing their spending habits, it said. In the three months to July 2019, sales increased by 0.5% when compared with the previous three months, with food stores and fuel stores seeing a decline.
In London, one in 20 people even delayed their wedding due to Brexit, the accountancy firm found. That is the lowest increase this year.
Consumer spending growth in the UK fell to a record low in July, according to the British Retail Consortium and KPMG, due to Brexit uncertainty and slow real wage growth. Rhian Murphy, head of retail sales at the ONS, said: "Retail sales saw only modest growth in the last three months,
"Although still declining across the quarter, there was an increase in sales for department stores in July for the first time this year.
"Strong online sales growth on the month was driven by promotions."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that over the year "it's been a picture of relatively slow growth" in consumer spending.
"Partly, that reflects uncertainty over the Brexit process," he said.
Spending is still growing in real terms, but employment growth has been slow.
"The main bright spot has been to see wages grow at a decent rate," he added.
Emma Wall, head of investment analysis at Hargreaves Lansdown, agreed that wages growth had been positive. Wages growth hit an 11-year-high in June.
"If people are getting paid more, they tend to spend more," she said.
But she said there had been muted consumer spending growth over the year.
People had tended to hold off spending on big ticket items such as cars, in part due to uncertainty.
However, she cautioned that car spending had also been affected by factors such as concern over government plans to ban new diesel cars from 2040.
Correction 30th January 2020: This article has been rewritten following a complaint to the BBC's Executive Complaints Unit.